Arizona Public Service Company

About Arizona Public Service Company

Arizona Public Service (APS) is a grand provider of energy in the Grand Canyon state. APS, a subsidiary of Pinnacle West Capital, distributes power to about 1.2 million customers in 11 of 15 Arizona counties, making it the largest electric utility in the state. It operates about 5,900 miles of transmission lines and more than 29,100 miles of distribution lines; it generates more than 6,100 MW of capacity, mainly from fossil-fueled and nuclear power plants. Arizona Public Service also purchases power from other suppliers to supplement its company-owned generation capacity.

Geographic Reach

APS has six natural gas power plants located throughout Arizona: Redhawk, near Palo Verde; Ocotillo, in Tempe; Sundance, in Coolidge; West Phoenix, in southwest Phoenix; Saguaro, north of Tucson; and Yucca, near Yuma. The company operates in 11 of Arizona's 15 counties.

Operations

The company has a diverse portfolio of existing and planned renewable resources totaling 1,328 MW, including solar, wind, geothermal, biomass and biogas. Of this, 1,278 MW was in operation (including 189 MW of facilities owned by APS, 629 MW of long-term purchased power agreements, and 427 MW of customer-sited, third-party owned distributed energy resources).

In 2013 APS had 101 MW of renewable energy under contract for development or are under construction.

APS’s transmission facilities consist of 5,070 pole miles of overhead lines and 49 miles of underground lines. APS’s distribution facilities consist of 11,077 miles of overhead lines and 18,071 miles of underground primary cable. In addition to its own available generating capacity, the utility buys power under various arrangements, including long-term contracts and purchases through short-term markets to supplement its owned or leased generation and hedge its energy requirements.

The company has long-term gas transportation agreements with three different companies, some of which are effective through 2024.

Financial Performance

APS accounted for almost all of parent Pinnacle West's revenues in 2015. Its net sales increased by $3.4 million compared to 2014.

Net income increased in 2015 by 7% due to decreased fuel and purchased power expenses and operations and maintenance expenses partially offset by increased depreciation and amortization expenses.

APS' net cash provided by the operating activities decreased by $24.1 million due to a change in long term regulatory liabilities and the absence of income tax receivable.

Strategy

By 2030 the company is expecting to add 700,000 new customers. It plans to meet those customers’ needs through innovation and excellent service. APS is also monitoring the impacts on its coal fleet that may result from increased regulation and potential legislation concerning GHG emissions.

APS’ strategy includes executing purchased power contracts for new facilities, ongoing development of distributed energy resources and procurement of new facilities.

In 2015, APS completed construction of its $675 million 170 MW AZ Sun Program. It closed its 260 MW Unit 2 at Cholla that year. In its 2014 plan, APS looked to develop 275 miles of new lines over the next ten years. One major project under development is a new 500kV path that start from the Palo Verde hub around the western and northern edges of the Phoenix metropolitan area and end at a bulk substation in the northeast Phoenix.

The company is developing solar resources through the AZ Sun Program, with an investment of $695 million. APS has spent almost $1 billion on solar projects across Arizona and now uses 750 MW of solar capacity on its system, enough to serve the energy needs of 185,000 APS customers.

APS is also pushing conservation and the use of renewable energy in order to meet regulations requiring lower carbon emissions from power plants.

Company Background

APS was established in 1920.

In 2010 Arizona Public Service entered a long-term power purchase with a unit of NextEra Energy Resources, to buy power from the 99-MW Perrin Ranch Wind Energy Center, Arizona's largest wind project, which became fully operational in 2012.

In 2013 the company increased solar capacity for customers with four new large-scale solar photovoltaic plants coming online. The facilities, located in western Arizona, have a combined generating capacity of 62 MW, enough electricity to power 15,500 APS customers.

As part of an ongoing commitment to ramp up renewable energy plants, the company helped to build one of the world's largest solar facilities (a 250-MW concentrating solar power plant) 70 miles southwest of Phoenix, near Gila Bend, Arizona, which came online in 2013.

In 2013 APS purchased Southern California Edison’s ownership in Units 4 and 5 of the Four Corners Power Plant near Farmington, N.M. This allowed the company to continue to support the economy of the Navajo Nation and surrounding community, and help electric users in the Southwest with an important, low-cost generating resource.